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Afternoon Market Recap for Feb. 22, 2019

Mixed markets limp into the weekend.

Corn tilts slightly higher, while soybeans and some wheat contracts slip lower

Grain markets had plenty to chew on today, from a bevy of USDA acreage and export data to plenty of fresh speculation regarding U.S.-China trade negotiations. But by the end of Friday’s session, only spring wheat futures moved the needle in any substantial way, booming more than 1.5% higher after lower production estimates and higher exports triggered some technical buying. Corn, soybeans and winter wheat contracts finished narrowly mixed on some minor technical maneuvering.

Heading into the weekend and through the early part of next week, seasonally cool weather will persist farther west, but warmer-than-average temperature will invade areas east of the Mississippi River for the next several days. The latest seven-day cumulative precipitation map from NOAA shows plenty of additional rain and snow expected across the eastern half of the country through March 1.

Investors continue to feel optimistic about ongoing U.S.-China trade negotiations, pushing the Dow 150 points higher in afternoon trading and briefly cresting over 26,000 points for the first time since early November. Presidents Donald Trump and Xi Jinping are now working to schedule a meeting at Mar-a-Lago in late March. Energy futures were mixed Friday afternoon, as crude oil continued to make inroads while gasoline and diesel made a slight retreat. The U.S. Dollar softened slightly.

Corn prices finished narrowly mixed after some light technical buying Friday, prompted by some mostly bullish USDA production and export data out this morning. March futures crossed Friday’s finish down 0.25 cents to $3.7525, while May futures crept 0.25 cents higher to $3.8450.

Corn basis bids turned up another round of mixed results Friday, signaling some uneven demand across the central U.S. Bids moved as much as 5 cents higher at an Illinois river terminal and as much as 4 cents lower at an Iowa processor today.

USDA’s latest assessment for 2019 corn production is up 3% to 14.890 billion bushels over average yields of 176.0 bushels per acre. Ending stocks for 2019/20 are projected to drop 5% year-over-year to 1.650 billion bushels, as exports are expected to move up to 2.475 billion bushels. That scenario is supportive of an average farm price of $3.65 per bushel, up 5% from last year, according to USDA.

USDA’s latest round of export data showed total old crop corn sales of 238.5 million bushels from Jan. 4 to Feb. 14, which were a little better than trade guesses and also beat the rate needed to reach USDA’s forecast for the 2018 crop.

According to EPA, the U.S. generated 1.21 billion ethanol blending credits in January, down slightly from December’s total of 1.25 billion. Biodiesel blending credits saw a much steeper decline last month, moving from 433 million in December down to 260 million in January.

Preliminary volume estimates were for 561,662 contracts, slipping below Thursday’s final count of 622,168.

Soybean prices ended a bumpy Friday slightly lower after some late technical selling. March futures slipped 0.75 cents to $9.1025, with May futures down 0.5 cents to $9.2375. Traders await more news about the latest round of high-level negotiations between the U.S. and China, which took place yesterday and today.

Soybean basis bids were largely unchanged Friday but did firm by 4 cents at an Illinois river terminal and 5 cents at an Iowa processor today.

USDA’s latest projections for the 2019 soybean crop include an average yield guess of 49.5 bushels per acre, for a total production of 4.175 billion bushels (down moderately from last year). USDA is also projecting a record 2019/20 soybean crush totaling 2.105 billion bushels, compared to 2.025 billion a year ago.

Soybean ending stocks for 2019/20 are still projected to be historically high, at 845 million bushels, but are still expected to shrink by 65 million bushels year-over-year. USDA projects a season-average farm price of $8.80 per bushel this coming marketing year, which is 20 cents higher year-over-year (but still moderately lower than $9.33 from 2017/18 and $9.47 in 2016/17).

The latest USDA export sales data, covering a six-week period from early January to mid-February, showed China bought 144 million bushels of soybeans from the U.S. during the last month and a half, 60% of the 240 million in old crop business done during the period. Still, total old and new crop business done since Jan. 4 fell below the level of trade guesses, though those estimates varied widely.

The Buenos Aires Grains Exchange expects Argentina’s 2018/19 soybean production to hold steady at 1.947 billion bushels after the group rated 87% of the nation’s crop in favorable condition. Harvest kicks off in a few weeks.

Preliminary volume estimates were for 136,448 contracts, dropping significantly below Thursday’s final count of 363,867.

Wheat prices trended higher Friday, propped up by some technical buying. March Chicago SRW futures gained 0.25 cents to $4.8675, March Kansas City HRW futures firmed 2 cents to $4.5725, and March MGEX spring wheat futures boosted 9 cents higher to $5.6775.

Despite slightly fewer acres this year, USDA is projecting U.S. wheat production will tick 1% higher to reach 1.902 billion bushels if average yields can stay on the current linear trend of 47.8 bushels per acre.

On the demand side, higher domestic use could be more than offset by lower exports in 2019/20. But reduced supplies heading into the upcoming marketing year could leave ending stocks down 7% to 944 million bushels. USDA considers that amount “burdensome” but overall supports small average farm price gains to $5.20 per bushel next year.

Today’s wheat export data provided at least a little backing for USDA expectations that sales and shipments would pick up this winter. Total old crop sales of 131.4 million bushels, or an average of 21.9 million bushels a week, were much better than recent reports. Still, total commitments remain behind the percentage of USDA’s forecast normally seen this time of year.

French consultancy FranceAgriMer reports that 85% of the country’s soft wheat crop is in good to excellent condition as of February 18, which is unchanged from the prior week. The group also reports that 80% of France’s winter barley crop is rated good to excellent.

Preliminary volume estimates were for 101,323 CBOT contracts, falling moderately below Thursday’s final count of 169,530.

 

Closing market prices, Feb. 22, 2019

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